How to Do Comparative Market Research

Market research is an important managerial tool that forms the basis of the marketing strategy and campaign. Read on for an understanding of how to do comparative market research.

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Market research is the process of systematically gathering, recording, classifying, measuring, interpreting, and analyzing data related to markets, to identify how changes in the market affect customer behavior. The scope extends to aspects of a business environment such as competition, structure of markets, regulations, state of the economy and other factors, financial analysis of a company or product, and more.

Comparative market research is the process of undertaking market research to identify the similarities and differences, and/or the uniqueness and interrelatedness of two sets of conditions or of two different products or services related to the scope of market analysis. Companies undertake comparative market research to prepare marketing strategies, benchmark and for many other purposes.

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Points of Reference

The first step in how to do comparative market research is to establish points of reference. This requires fixing the range of comparison, or what is being researched, and why. Such points of comparison may extend to places, time, economy, society, demography, or any other basis. The basic consideration is to ensure comparability of the two points of comparison by ensuring an essential identity among them.

Consider a few examples of competitive market research, such as "a study on the marketing strategies adopted by telecommunication companies in USA and Europe," "a study on sales during different economic conditions", and "price sensitivity of a product among different social classes." In the first study, the points of reference are geographical places, USA and Europe. In the second study, the points of reference are different economic conditions. Though not specified in the title, possible points of reference could include recession and boom periods of the economy. The points of reference for the study of price sensitivity vis-a-vis different social classes could include "industrial workers," "corporate employees," and "high net-worth individuals."

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Methodology

The methodology of how to do comparative market research depends on the topic and nature of research. For instance, assuming the comparative market analysis seeks to determine the price sensitivity of a certain product in three different locations, the steps involved are listing out the locations and the products as constants, and price and demand as variables, collecting price and demand data for each product from each location, and subjecting such data to analysis.

One important consideration when undertaking comparative market research is to rely on fresh or raw data rather than previously used data. Previously used data for different points of reference may be compiled based on different methodologies or backgrounds, and as such remain incongruous, with the potential to cause distortions.

Another important consideration is to ensure standardization of data before classifying, analyzing and interpreting the data to form conclusions. Apply the same statistical tools and techniques on data from all points of reference.

While there is nothing wrong with making a hypothesis and working toward proving or disproving the hypothesis, assuming a result and trying to collect data to substantiate such assumptions or claims is not the right approach toward comparative market research.

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Validity

The validity of the comparative market research depends on the unique application of approach and strategy across the board. This requires treating each point of reference in the same way and applying a common methodology of data collection, recording, classification, measurement, interpretation and analysis.

Properly done comparative market research provides management with relevant, accurate and updated information that forms the basis of marketing strategies and initiatives.